You’ve probably heard about the guy who has spent years trying to find a hard drive, he accidently threw away, that contained the private keys to 7,500 bitcoins or the billions of dollar‘s worth of bitcoin that have been stolen from cryptocurrency exchanges by hackers. Additionally, blockchain analytics firm, Chainalysis, reported that over 2.78 million bitcoins, 13% of all bitcoins that will ever exist, have been lost forever. So, people might wonder: Is Bitcoin Safe?
Bitcoin facilitates peer to peer payments without the need of an intermediary. This represents a great technological advancement. However, with great power comes great responsibility. When you remove the third parties that process transactions, like traditional financial institutions, users become accountable for the security of their own funds.
Is Bitcoin Safe?
Since its inception, Bitcoin’s main feature has been its security. This helped Bitcoin become the first ever decentralized form of electronic currency. As opposed to traditional payment solutions, which rely on a trust based model and intermediaries, Bitcoin relies on blockchain technology to guarantee the legitimacy of transactions.
To put it simply, a blockchain is a digital, decentralized and public distributed ledger used to keep a record of transactions. To record transactions on its blockchain, the Bitcoin network uses a proof of work algorithm and other consensus mechanisms so that that is almost impossible to manipulate it. At the moment, the level of resources required to maliciously attack Bitcoin’s blockchain make it infeasible for any bad actor to attempt it.
How Can I Keep My Bitcoin Safe?
Do your due diligence before selecting a wallet and do not keep in exchanges amounts you can’t afford to lose. Preferably, store you private keys offline.
Although this can be intimidating to some, avoid using web wallets. They are easier to use, but also more likely to get hacked.
Always keep your private keys safe and backup your seed phrases. Many in the Bitcoin community recommend using a hardware wallet. If you are expecting a Bitcoin payment, make sure the transaction has over 6 confirmations before finalizing the deal.
Common scams to avoid
Phishing is one of the most popular and common modus operandi employed cyber criminals to steal bitcoins. In Bitcoin’s 10 year history many users have been affected by this type of cybercrime. Phishing is when hackers trick you into providing information required to retrieve your bitcoins by setting up portals that imitate popular cryptocurrency exchanges or wallets. Before utilizing any application used to store your bitcoins, make sure to verify its authenticity.
Furthermore, billions of dollars worth of bitcoin have been stolen from exchanges. When funds are deposited into an exchange, users are fundamentally transferring the ownership of the bitcoins to them. Again, do not keep in exchanges amounts you can’t afford to lose. Other common scams include fake ICOs, cloud mining and multi-level marketing schemes.
Take the necessary precautions to keep your Bitcoins safe. Bitcoin transactions are irreversible and there is no Bitcoin helpdesk. If your private keys are lost or someone steals your bitcoins, they are gone forever.
Remember, make sure to keep your private keys protected and back up seed phrases required to recover your wallet. You are the only one accountable for the security of your bitcoins.